CNN needs more than a new CEO. It needs a business strategy

Warner Bros. Discovery CEO David Zaslav could have selected from a litany of reasons to fire Chris Licht as CNN's chief.

Licht, who left the network Wednesday after just over a year in the role, struggled with leadership style, lifting morale, programming decisions, how to cover former President Donald Trump and, ultimately, hubris.

But Licht's entire tenure at CNN could have turned out differently had he persuaded Zaslav to keep CNN+.

That may sound absurd. Hardly anyone watched CNN+ during its first two weeks of existence last year. Zaslav and several other Discovery executives, including current Warner Bros. Discovery head of streaming JB Perrette and now-CNN Chief Operating Officer David Leavy, were skeptical of spending hundreds of millions of dollars on niche or half-baked content ideas like "Jake Tapper's Book Club" and "Parental Guidance with Anderson Cooper." Leavy is now part of the executive team that will help Zaslav find a new CEO.

Zaslav thought CNN+ was a waste of resources for a company saddled with $50 billion of debt that needed to boost free cash flow and generate $3 billion in merger-related synergies. But before he made any decisions, he wanted to hear Licht's thoughts.

Licht was supposed to begin his job May 2, 2022, but he started a few weeks early to weigh in on CNN+. In several virtual conferences, he met with CNN+ head Andrew Morse, CNN+ general manager Alex MacCallum and CNN Chief Tech Officer Robyn Peterson, according to people familiar with the matter who declined to be identified due to the private nature of the talks. Perrette and Discovery streaming CFO Neil Chugani (who would become CNN's CFO) were also there.

Licht expressed his skepticism with the product's programming, according to people in the meeting. The discussion centered around the viability of offering a product named after CNN without actually featuring a live feed of the network's cable programming. Perrette told the CNN+ leadership to pause all marketing spending and not to launch on Roku.

While the CNN+ team came away from the meetings assuming the streaming service would likely be killed, they sent financials to Discovery's leadership. They budgeted to spend $440 million in 2022 and $550 million in 2023, the people said. The proposal called for CNN+ to turn a profit by 2025 and break even on the cumulative investment by 2028.

Less than three weeks later, CNN+ was dead. A Warner Bros. Discovery spokesperson declined to comment on the details of the meetings.

Had Licht persuaded the Discovery executives to keep CNN+, it's possible his tenure at CNN would have developed differently.

Licht's background is show producing. He launched "Morning Joe" on MSNBC and jumpstarted "Late Night with Stephen Colbert" on CBS. CNN+ would have given him a canvas to create shows from scratch. It also would have given him a growth story to pitch to the press and investors. If additional spending wasn't in the cards, he could have slashed the budget but kept the bones of the subscription product alive, iterating on creative ideas until he landed on something that worked. CNN+ launched at $4.99 per month, though pricing could have been adjusted.

Former CNN head Jeff Zucker, who left the network after disclosing a workplace relationship just months before the WarnerMedia-Discovery merger, had aspirations about turning CNN+ into a New York Times-like subscription product. That would have taken years, but it also might have given employees and management a north star. Attention on CNN+ could have been a ready-made distraction from falling linear TV ratings, which Licht could have dismissed as relatively unimportant compared with building the company's future.

Without CNN+, Licht was left with a foundering cable TV network and no coherent digital strategy. That's anathema to a modern media company.

In his year on the job, Licht laid off hundreds of employees and mostly shifted around existing CNN anchors and reporters to build a new morning show and prime-time programming. His experiment to move prime-time anchor Don Lemon to the morning failed. CNN fired Lemon in April. Licht attempted to move Tapper, an afternoon anchor, to prime time, but the early ratings weren't good and Tapper wanted to keep his time slot, so Licht scrapped his plans.

In Licht's defense, his lack of future strategy echoed Zaslav's limited vision.

"When [Zaslav] called and offered me the job, he told me what he was looking for out of CNN," Licht told CNBC last year. "And I said, 'That's exactly the kind of network I would like to see.' There's no daylight between his vision for this network and my vision for this network. The only reason why I took this job is because it was him in charge. I thought, I can deliver this for him."

Zaslav told Licht he wanted to make CNN less of an advocacy network and more of a straight news network. Warner Bros. Discovery board member John Malone told CNBC in 2021 he'd "like to see CNN evolve back to the kind of journalism that it started with, and actually have journalists, which would be unique and refreshing."

But CNN journalists argued this was a straw man. They claimed they weren't advocating for anything other than truth. Several took offense to Malone's comments as a slight to their journalistic skills.

CNN can change the tone of its programming around Trump, who is the front-runner for the 2024 Republican presidential nomination. It can tone down hyperbole and rhetoric around his lies and exaggerations, depending on the situation.

Still, that's not a business strategy. CNN+ may have been doomed to be nothing more than a fledgling streaming service. But it represented hope for how a brand could transition toward the future. A successful leader of CNN will need to figure out a way to boost ratings with compelling programming while also fostering new digital businesses that bring in revenue and younger audiences.

It's possible CNN+ would have never taken off, and Licht would have spent the past year doubling down on a flawed concept that his Discovery bosses never liked — which probably would have led to his firing anyway. Investors thumbed their nose at increased spending on streaming services last year, so any plan around CNN+ needed to emphasize its long-term appeal.

The problem was without CNN+, Licht held a weak hand. CNN's profit fell in 2022 to about $750 million (including $200 million in CNN+ losses) from $1.25 billion the previous year on a weak advertising market and declining cable subscription fees, according to The New York Times. Advertising revenue at CNN dropped nearly 40% under Licht, The Daily Beast reported, citing MediaRadar data.

The 2024 election and a more robust political ad market should help CNN's financials improve next year, but "wait for 2024" isn't a strong message — and it doesn't provide a solution for 2025 and beyond.

If Zaslav wants to find a CEO that will win the hearts and minds of employees and boost the top and bottom lines, he'll need to find someone with a more holistic strategy than just programming for a 55-and-older cable TV audience.

In that way, Licht was doomed from the start.

Correction: Robyn Peterson was chief tech officer of CNN. An earlier version misstated his title. Neil Chugani was CFO of Discovery streaming. An earlier version misspelled his name.

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